Strata vs Individual vs Freehold vs Leasehold

The Torrens System created the use of land titles.
A land title is basically a piece of document that is given to you by the government to show that you are the owner of the land and if there are any other interests and rights in the land (for example, whether or not the land is charged to a bank).

There are 2 different kinds of land title
While there are different categories of land and different uses for it, the titles which are issued by the Registrar only fall in one of two categories.
The first is commonly referred to as an individual title while the other is known as a strata title.

Individual title
An individual title is usually (not always, especially if the area is gated and guarded) issued for landed properties such as terrace houses, semi-detached houses, bungalows, and the sorts.
An individual title is issued when you are the only owner of the whole piece of land.

Strata title
On the other hand, a strata title is usually issued for high-rise properties such as condominiums, apartments, and landed properties which are gated and guarded.
A strata title is issued when you own a portion of the land, alongside the other owners.
A typical feature of strata properties is when the house you bought (whether landed or high-rise), comes with common facilities and areas such as swimming pools, clubhouses, and other common properties which are shared by all the residents.

The easiest way we can put it is like when you have an individual title, you get the whole cake to yourself.
When you have a strata title, that one cake is split into eight slices and you get one slice.

Now comes the most important question that you may have, does a strata title affect me differently from an individual title?
The straightforward answer is no.
Getting a strata title over an individual title doesn’t mean that you got a worse bargain.
It is a only a difference in preference and needs and neither of these titles affect the property’s price.
However, an important point to note is that since strata properties have common facilities and areas, there are more laws that govern strata titles and their management such as the Strata Titles Act 1985, the Strata Management Act 2013, and the Strata Management (Maintenance and Management) Regulations 2015.

The more important thing to look at is the tenure of your land because the tenure can affect a lot of things from property demand to price.

Land tenure is divided into freehold and leasehold.

Freehold
Freehold property means that the land belongs to you in perpetuity (forever and ever and ever and ever). The government can still acquire your land if they have to but this is much harder than in leasehold lands as we will see below.

Leasehold
Leasehold means that the State Authority owns the land and he is merely leasing it to you for a certain number of years, the most common one being 99 years (section 76(a) NLC).
Upon expiry of the lease, the land with revert back to State Authority.
The State Authority then holds the power to decide whether or not he wants to extend the leasehold.
The application to extend the lease has to be made before the lease expires and you will have to pay a premium for an extension.
The premium amount will be determined by the relevant State Authority.

In a way, leasehold land works like a tenancy.
You enter into a tenancy with the landlord for 3 years.
During that time, you don’t own the property but merely rent it and when the rental period is coming to an end, you can either return the property to the landlord or you can negotiate for another rental period with him.

By their powers combined
At the end of the day, if you purchase a property in Malaysia, you can end up with one of the following combinations below:

Strata + freehold = you purchased a piece of property that has common facilities shared with other people and a part of the land belongs to you forever

Strata + leasehold = you purchased a piece of property that has common facilities shared with other people and a part of the land belongs to you for a maximum of 99 years

Individual + freehold = you purchased a piece of property where you get the entire piece of land and it belongs to you forever

Individual + leasehold = you purchased a piece of property where you get the entire piece of land and the entire piece of land belongs to you for a maximum of 99 years

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